Assignment of a lease - Deduction of title by the assignor

Learning Outcomes

After reading this article, you will be able to explain the legal process for deduction of title by the assignor in a lease assignment, distinguish the requirements for registered and unregistered land, identify the importance of landlord’s consent, and apply the relevant statutory rules and practical steps to ensure a valid assignment. You will also be able to spot common risks and advise on best practice for SQE1 scenarios.

SQE1 Syllabus

For SQE1, you are required to understand the legal and practical steps involved in the assignment of a lease, with particular focus on deduction of title by the assignor. In your revision, pay close attention to:

• The process of deduction of title in lease assignments for both registered and unregistered land
• The documentation and evidence required to prove the assignor’s right to assign
• The role and requirements for landlord’s consent to assignment
• The statutory and contractual requirements for a valid assignment
• The risks and practical issues that may arise for the assignee

Test Your Knowledge

Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.

1. What documents must the assignor provide to deduce title to a registered leasehold interest?
2. Why is landlord’s consent often required before a lease can be assigned?
3. What is a good root of title in the context of unregistered leasehold assignments?
4. What are the consequences of assigning a lease without obtaining required landlord’s consent?

Introduction

The assignment of a lease is the transfer of a tenant’s entire interest in leasehold property to a new party (the assignee). For a valid assignment, the assignor must prove their right to assign by properly deducing title. This process protects the assignee and any lender, ensuring that the leasehold interest is transferred free from undisclosed defects or adverse interests. The requirements for deduction of title differ between registered and unregistered land, and landlord’s consent is often a key step. This article outlines the essential legal and practical steps for deduction of title by the assignor in a lease assignment, as required for SQE1.

Deduction of Title in Lease Assignments

Deduction of title is the process by which the assignor proves to the assignee that they have the right to assign the leasehold interest. The method depends on whether the lease is registered or unregistered.

Deduction of Title – Registered Leasehold

Where the leasehold title is registered, the assignor’s solicitor must provide:

• Up-to-date official copies of the leasehold register and title plan from HM Land Registry
• An official copy of the lease and any deeds of variation or supplemental documents
• Evidence of compliance with any restrictions on the register (e.g. landlord’s consent, lender’s consent)

Key Term: official copies
Official copies are certified extracts of the Land Registry register and title plan, admissible as evidence of title and required for property transactions.

The assignee’s solicitor must check the register for:

• The class of title (absolute, good leasehold, qualified, or possessory)
• The identity of the registered proprietor (assignor)
• Any restrictions, notices, or encumbrances affecting the lease
• The terms of the lease and any variations

If the lease is registered with good leasehold title only, the freehold (landlord’s) title should also be deduced to satisfy the assignee and any lender that the lease is validly granted.

Key Term: good leasehold title
A class of title where the leasehold interest is guaranteed, but the freeholder’s title is not guaranteed by HM Land Registry.

Deduction of Title – Unregistered Leasehold

For unregistered leasehold interests, the process is more detailed. The assignor’s solicitor must provide:

• An epitome of title: a chronological list of all documents evidencing title to the leasehold interest, usually covering at least the last 15 years
• Copies of the lease, any assignments, deeds of variation, and any relevant consents
• Evidence of a good root of title

Key Term: epitome of title
A schedule of title documents (with copies) showing the chain of ownership for unregistered land or leasehold interests.

Key Term: good root of title
A document (usually a conveyance or assignment) at least 15 years old, dealing with the whole legal and equitable interest, with no defects or doubts as to title.

The assignee’s solicitor must check:

• There is an unbroken chain of assignments from the root of title to the present assignor
• All documents are properly executed and stamped
• Any necessary consents (e.g. landlord’s consent) are present
• There are no adverse entries or undisclosed encumbrances

Land charges searches must be carried out against all relevant estate owners for their period of ownership to reveal any registered interests (e.g. restrictive covenants, equitable easements).

Landlord’s Consent to Assignment

Most leases contain a covenant restricting assignment without the landlord’s written consent. The assignor must obtain this consent before completion.

Key Term: landlord’s consent
The formal written approval from the landlord (or superior landlord) required before a lease can be assigned, as specified in the lease.

The process usually involves:

• The assignor applying to the landlord with details of the proposed assignee and any required references
• The landlord considering the application and (for qualified covenants) not unreasonably withholding or delaying consent (Landlord and Tenant Act 1988)
• The landlord issuing a licence to assign, often including conditions (e.g. an Authorised Guarantee Agreement or rent deposit)

Assignment without required consent is a breach of covenant and may result in forfeiture of the lease.

Other Consents and Practical Issues

If the leasehold interest is subject to a mortgage or charge, the lender’s consent may also be required. Any restrictions on the register must be complied with before the assignment can be registered.

The assignor must also provide evidence that all rent and service charges are paid up to date, and that there are no outstanding breaches of covenant.

Worked Example 1.1

Scenario:
A tenant holds a registered leasehold interest in a shop. The lease contains a qualified covenant against assignment without landlord’s consent. The tenant wishes to assign the lease to a new business.

Question:
What documents must the assignor’s solicitor provide to deduce title, and what steps must be taken before completion?

Answer: The assignor’s solicitor must provide up-to-date official copies of the leasehold register and title plan, an official copy of the lease and any variations, and evidence of compliance with any restrictions (including landlord’s written consent to assignment). The solicitor must also ensure all rent and service charges are paid, and that any lender’s consent is obtained if the lease is charged.

Worked Example 1.2

Scenario:
A tenant holds an unregistered leasehold interest in a flat. The lease is over 15 years old and has been assigned several times. The tenant wishes to assign the lease.

Question:
What must the assignor’s solicitor do to deduce title, and what searches are required?

Answer: The assignor’s solicitor must provide an epitome of title showing an unbroken chain of assignments from a good root of title, with copies of all relevant documents. Land charges searches must be carried out against all estate owners for their period of ownership to reveal any registered interests.

Exam Warning

Assigning a lease without obtaining required landlord’s consent is a breach of covenant and may result in forfeiture. Always check the lease for assignment restrictions and ensure all consents are obtained before completion.

Revision Tip

For SQE1, memorise the difference between deduction of title for registered and unregistered leasehold interests, and the consequences of failing to obtain landlord’s consent.

Summary

• Deduction of title by the assignor is essential to prove the right to assign a leasehold interest.
• For registered leases, provide official copies of the register, title plan, lease, and any variations.
• For unregistered leases, provide an epitome of title showing a good root and an unbroken chain of assignments.
• Landlord’s consent is usually required and must be obtained before assignment.
• All restrictions, consents, and lender requirements must be satisfied before completion.

Key Point Checklist

This article has covered the following key knowledge points:

• The process of deduction of title by the assignor in lease assignments for both registered and unregistered land
• The documentation required to prove the assignor’s right to assign
• The importance and procedure for obtaining landlord’s consent
• The need to comply with all restrictions and obtain any other necessary consents
• The risks of failing to deduce title or obtain required consents

Key Terms and Concepts

• official copies
• good leasehold title
• epitome of title
• good root of title
• landlord’s consent